The investment management industry performs a critical role in channeling finance to drive economic growth and to support saving by aging populations. As it continues to gain in size and importance, however, it is coming under ever closer regulatory scrutiny. In addition to continuing questions about systemic risk, it is being challenged to justify and reduce its charges and to control other costs paid for by clients. Long-standing arrangements between firms and intermediaries are being made transparent, the volume of new regulation is operationally challenging and requires fundamental changes to firms’ business models, and regulators are issuing a steady stream of information requests. 

At the same time, the investment pie is growing. New capital markets are opening and new fund passports and products are being introduced. Governments are encouraging their citizens to provide for their own retirement and to save in order to spend. Investment funds will likely be the underlying investment components for much of this new business, increasing monies managed by the industry and intensifying the search for investible assets.

Firms need to respond constructively to this closer scrutiny. They need to engage in open and positive dialogue with regulators, be open to challenge, rectify misconceptions and highlight unintended consequences. Successful firms will demonstrably act in their clients’ best interests and, by being on the front foot, will secure a larger slice of the growing investment pie.

Key questions for CEOs

• Are we open to challenge about our business model and activities?
• Are we engaged in constructive dialogue with the regulators?
• Is the culture of my firm focused throughout on the customer?
• Are we controlling the costs and charges borne by our customers?
• Are we on top of what is coming down the regulatory pipeline?
• Are we spotting the new opportunities arising from regulatory change?